Representing the Tenant Side
August 19, 15
Commercial tenants who represent themselves in complicated lease negotiations with building owners or managers often end up paying more than they should in unknown costs, or give up on important concessions in the lease that cause them later business difficulties. Office leases can be very complicated contracts. When business tenants negotiate leases, they have to make sure everything they need for the future development of their business is clearly specified. For example, the tenant may later learn that the landlord will not permit modifications to the property, such as extra walls, special signage, expansions, phone or communication systems that are essential to his or her business expansion plans. The tenant may also find that the duration of the airtight, unbreakable lease arrangement is too long and does not enable the business to change as originally planned.
Tenant representation in commercial real estate is carried out by trained and experienced brokers who have a clear understanding of their local markets, lease rates, rents and costs, as well as important supply and demand factors that may give the prospective tenant a leg up on negotiations. Generally, the details of a landlord's cost accounting are either missing or vague. These details make up a substantial part of the landlord's pricing policy. By paying attention to discretionary costs, and reducing them, tenant representatives can substantially lower costs over the life of the lease and thus cause substantial rent reductions.
Discretionary costs are added to the monthly rental. They are calculated on a per-square-foot basis. Most tenants are paying, not only for their own space but for building's operating expenses as well. Sometimes referred to as pass throughs, these costs are the proportion of the building's operating expenses the landlord decides the tenant should pay. Lease negotiations skillfully handled can influence the pass through levels.
LandPark Commercial knows the Houston area real estate market in-depth through years of experience representing tenants as well as landlords, sellers and buyers. If you are looking for commercial real estate, contact us.